OIG: Preferred hospital network doesn't violate anti-kickback statute

The Office of Inspector General won't impose sanctions on the use of "preferred hospital" networks as part of certain Medicare supplemental policies, the agency said in an advisory opinion posted Feb. 20.

Under the proposed arrangement at issue, a licensed offeror of Medigap and health insurance plans indirectly contracts with network hospitals for discounts of up to 100 percent on inpatient hospital deductibles covered by the Medigap plans.

The discounts that network hospitals would offer on inpatient deductibles and the premium credits that the insurer would offer to Medigap policyholders who have inpatient stays at network hospitals pose a minimal risk of fraud and abuse, according to the OIG.

Moreover, the "straightforward agreement" between the network hospitals and the insurer does not violate the anti-kickback statute because both the discounts and the premium credits would not affect per-service Medicare payments or increase utilization. The OIG noted that the proposed arrangement could lower Medigap costs for policyholders who select network hospitals without raising costs for those who use an out-of-network hospital.

However, a January study found supplemental Medigap plans increase Medicare's costs by encouraging more unnecessary tests and procedures, FierceHealthPayer previously reported.

The OIG noted that its advisory opinion is limited to the specific arrangement described and does not apply to other similar arrangements.

The advisory opinion on preferred hospitals comes amid a growing fight against narrow networks. Lawmakers in Mississippi, South Dakota and Pennsylvania, for example, are considering "any willing provider" laws that would force insurers to expand their networks and accept any healthcare provider that meets contract terms.

For more:
- here's the OIG advisory opinion (.pdf)